Transcript: One Thin Dime

Radio voice: “The spirit of awakened boosterism has taken hold at ERIE until we are veritable spirits of boosterism. Let’s keep the ball in the air, get everybody doing it, and make Erie the Wonder City. It’s something more potent than money, greater than dollars and cents: it’s the spirit of Go and Do It that actually gets it done.”

[register chiming]

Narrator: The city fathers in Erie, Pa., had spoken. It was against this backdrop of renewed civic pride and the car craze of the 1920s that two entrepreneurs cashed in their chips with their former employer, the Pennsylvania Indemnity Exchange, and set out on their own to create the Erie Insurance Exchange and its managing company, the Erie Indemnity Company. In 30 months and 20 days, they would raise $31,000 from 90 stockholders using a dog-eared, 10-cent pencil tablet as a prospectus.

They were an unlikely pair: H.O. Hirt, a college-educated schoolteacher and one-time grocery store manager; and Ollie Crawford, a former brakeman for the Pennsylvania Railroad, who had run away from home at the age of 16 to join the Navy.

It was the Roaring 20s, and everybody and his barber were gambling in the stock market or peddling a wildcat of their own. New ideas were a dime a dozen, but Hirt and Crawford had a unique sales proposition, and this dynamic duo had the proven ability to sell. H.O. had transformed a bankrupt grocery story, increasing sales by over 900 percent in 13 weeks. Ollie had made his mark working at the Pennsylvania Indemnity Exchange. He sold 100 auto insurance policies every month, and once wrote 23 auto applications in one day.

The two men recognized a good opportunity when they saw one. Pennsylvania was one of the most important markets for automobiles and auto insurance. Productive farms, prosperous manufacturing firms, and vibrant financial enterprises made Pennsylvania the second wealthiest state in the nation. Pennsylvania’s highway department was setting a record pace for road construction. And with more cars on the road, inevitably there would be more accidents.

As they filled their 10-cent tablet with their irrefutable arguments for success, The ERIE’s bedrock values began to emerge.

Chairman Tom Hagen: He often said through the years that insurance is the most important industry that there is, because you can’t get credit, commerce doesn’t move, unless there is insurance involved in those transactions. The purpose of The ERIE was to provide as near perfect protection, as near perfect service as is humanly possible, and to do so at the lowest possible cost. And that really encapsulates the whole idea that they had in founding The ERIE.

Narrator: The founders’ dedication to consumer-oriented reciprocal insurance; courage in fighting for that principle against all odds; and their plain, hard-nosed selling ability made a compelling argument, but they would have to raise $31,000 to make it work.

With just $2,000 in their pockets, most of that borrowed from relatives, they set out in a 1920 Dodge Touring Car, dashing from one meeting to another, talking to potential customers and selling shares in their new venture. They sounded out prominent business leader like Ed Nick of the Northern Equipment Company; George Epp, founder of the Epp Furniture Company; and Elijah H. Mack, owner of the Boston Store. When Nick asked how in the world a small insurance exchange could survive competition from larger, more established insurers, H.O. replied, “But, Mr. Nick, you don’t understand: we are the competition.”

The Erie Insurance Exchange would succeed, and they had the figures to prove it. Estimated first-year expenses were only $11,850, including a $2,400 salary for each of the founders. And, for the investors, they had the most appealing bait: the clincher was the record of the Glens Falls Insurance Company. In fifteen years $100 worth of stock had grown to $500, and shareholders received $1,285 in cash dividends without investing a single additional penny. They crammed their tablet with convincing market research, pointing out the stock performance of other successful insurers. Soon, all of Erie’s business leaders were signing on as stockholders.

Hagen: He knew people, and he was a salesman. He had no problem going out and talking to them about an idea. Crawford was a salesman too, and Crawford knew a lot of the people who were the foremen and key people in the shops: GE, Hammermill, National Forge, a number of companies here in town. He knew these people, and they had been selling auto insurance for two years, so they had a book of business of people that they had sold insurance to.

Narrator: On April 20, 1925, the Erie Insurance Exchange was ready to move into a two-room office above the Five-and-Dime Store in downtown Erie. H.O.’s 1920 Dodge was insured on the company’s 11th policy, effective on ERIE’s first day of business. The two salesmen sold 150 new auto applications in their first two days and vowed to break every record in the books. The annual premium charge per automobile: $34.

Hagen: He was a person that you felt immediately was telling you the truth, but he never took that for granted. He would have to prove to you that that was the case. And so he’d go into his sales kit and get stuff out. I think you can sum up his philosophy, and it’s: “know your stuff, believe your stuff, do your stuff.”

Narrator: In later years, the 10-cent tablet found its way into the vault at the Erie Insurance Home Office.

Hagen: He took a grease pencil and he wrote on this used envelope, “Precious document, original ‘prospectus’ — in quotes — used by founders Hirt and Crawford in promoting the sale of original stock in the Erie Indemnity Company in winter and spring of 1925. Total expenditure for promotion: one 10-cent tablet and 3 months and 20 days of unpaid time of the two promoters.” And he put the document in here and he gave to me and said, “put it in the vault!”

Narrator: They had the right time. They had the right connections. They had experience in the insurance business. But what really moved it along was their enthusiasm, their determination, and their vision for what this company could become.

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